Gold & Silver Daily

Ed's Critical Reads

Sep 27, 2014

Macy's CEO Offers an Ominous Insight About American Consumers

Macy's CEO Terry Lundgren said he was expecting a rebound this year. 

It didn't happen. 

"The consumer has not bounced back with the confidence that we were all looking for," Lundgren said at the Goldman Sachs Annual Retail Conference earlier this month, weeks after the company reported sluggish second-quarter sales. 

Lundgren also said he doesn't expect things to get better in time for the holiday season. 

Why would anyone be surprised by this news, I wonder?  It was posted on the businessinsider.com Internet site at 1:25 p.m. EDT on Friday---and I thank Harry Grant for today's first story.

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'Bond King' Bill Gross quits Pimco for Janus

Bill Gross, the bond market's most renowned investor, quit Pimco for distant rival Janus Capital Group Inc on Friday, the day before he was expected to be fired from the huge investment firm he co-founded more than 40 years ago.

Gross, 70, had been clashing with the firm's executive committee and had threatened to resign multiple times, a source familiar with the situation said. The committee had planned to accept his latest resignation from the post of chief investment officer on Saturday.

The surprise development, which rattled the U.S. bond market, came the day before Pimco and its parent, German insurer Allianz SE, planned to dismiss Gross, the source said.

Gross will manage the Janus Global Unconstrained Bond Fund beginning on Monday, Janus said in a statement. The fund, started in May, has just $13 million in assets.

This Reuters article appeared on the ca.finance.yahoo.com Internet site yesterday sometime---and I thank Dr. Dave Janda for bringing it to my attention.

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David Stockman: Peak Debt—-Why the Keynesian Money Printers are Done

Bloomberg has a story today on the faltering of Draghi’s latest scheme to levitate Europe’s somnolent socialist economies by means of a new round of monetary juice called TLTRO—–$1.3 trillion in essentially zero cost four-year funding to European banks on the condition that they expand their business loan books. Using anecdotes from Spain, the piece perhaps inadvertently highlights all that is wrong with the entire central bank money printing regime that is now extirpating honest finance nearly everywhere in the world.

On the one hand, the initial round of TLTRO takedowns came in at only $100 billion compared to the $200 billion widely expected. It seems that Spanish banks, like their counterparts elsewhere in Europe, are finding virtually no demand among small and medium businesses for new loans.

Many small and medium-sized businesses are wary of the offers from banks as European Central Bank President Draghi prepares to pump more cash into the financial system to boost prices and spur growth. The reticence in Spain suggests demand for credit may be as much of a problem as the supply.

The monthly flow of new loans of as much as 1 million euros for as much as a year — a type of credit typically used by small and medium-sized companies — is still down by two-thirds in Spain from a 2007 peak, according to Bank of Spain data.

On the other hand, Spain’s sovereign debt has rallied to what are truly stupid heights—with the 10-year bond hitting a 2.11% yield yesterday (compared to 7% + just 24 months ago). The explanation for these parallel developments is that the hedge fund speculators in peripheral sovereign debt do not care about actual expansion of the Spanish or euro area economies that is implicit in Draghi’s targeted promotion of business lending (whether healthy and sustainable, or not). They are simply braying that  “T” for targeted LTRO is not enough; they demand outright sovereign debt purchases by the ECB—-that is, Bernanke style QE and are quite sure they will get it. That’s why they are front-running the ECB and buying the Spanish bond. It is a patented formula and hedge fund speculators have been riding it to fabulous riches for many years now.

This commentary, with some excellent charts, showed up on David's website on Friday someday---and it's the first offering of the day from Roy Stephens.

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Doug Noland: What We Know

Heightened global market instability has began to be transmitted to U.S. securities markets.

There’s much that we simply don’t know. There is as well a lot we know with an important degree of confidence.

Some months back I highlighted an exceptional Bank of America Merrill Lynch research report, “Pig in the Python – the EM Carry Trade Unwind” (Ajay Singh Kapur, Ritesh Samadhiya and Umesha de Silva). Especially in light of recent market developments, it’s a good time to revisit this thesis and highlight some of their data.

From “Pig in the Python,” February 2014: “Since 3Q2008, the US Federal Reserve QE has unleashed a massive $2 TN debt-driven carry trade into emerging markets, disproportionately increasing their forex reserves (by $2.7 TN from end-3Q 2008), their monetary bases (by $3.2 TN), their credit and monetary aggregates (M2 up by $14.9 TN), consequently boosting economic growth and asset prices (mainly property and bonds). As the Fed continues to taper its heterodox policy, we believe these large carry trades are likely to diminish, or be unwound.”

Doug's must read commentary showed up on the prudentbear.com Internet site on Friday evening---and it's courtesy of reader U.D.

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Whoodathunkit: Secret tapes show New York Fed is the tool of the big banks

Barely a year removed from the devastation of the 2008 financial crisis, the president of the Federal Reserve Bank of New York faced a crossroads. Congress had set its sights on reform. The biggest banks in the nation had shown that their failure could threaten the entire financial system. Lawmakers wanted new safeguards.

The Federal Reserve, and, by dint of its location off Wall Street, the New York Fed, was the logical choice to head the effort. Except it had failed miserably in catching the meltdown.

New York Fed President William Dudley had to answer two questions quickly: Why had his institution blown it, and how could it do better? So he called in an outsider, a Columbia University finance professor named David Beim, and granted him unlimited access to investigate. In exchange, the results would remain secret.

After interviews with dozens of New York Fed employees, Beim learned something that surprised even him. The most daunting obstacle the New York Fed faced in overseeing the nation's biggest financial institutions was its own culture. The New York Fed had become too risk-averse and deferential to the banks it supervised. Its examiners feared contradicting bosses, who too often forced their findings into an institutional consensus that watered down much of what they did.

This story went viral the moment it got posted on the Internet yesterday.  This version, which is a must read, appeared on the propublica.org Internet site at 5 a.m. EDT on Friday morning---and I found it in a GATA release.

There are three other versions that were sent to me.  The original Bloomberg story headlined "The Secret Goldman Sachs Tapes" was written by Michael Lewis of "Flash Boys" fame---and it's a must read as well.  I thank Roy Stephens for sending that version.  Zero Hedge couldn't help themselves---and their take on it is headlined "How Goldman Controls the New York Fed: 47.5 Hours of "The Secret Goldman Sachs Tapes" Explain"---and this commentary is courtesy of reader 'David in California'.  The New York Post also jumped into the fray with an article entitled "Tapes showing meek oversight of Goldman are about to rock Wall Street"---and this one is courtesy of reader Brad Robertson.

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Alex Jones Interviews Doug Casey

Alex was the dinner speaker last Saturday night at the Casey Summit in San Antonio---and his speech, along with the zeal with which it was delivered, received decidedly mixed reviews.

But here he is in an interview with Doug Casey.  It was posted on the youtube.com Internet site yesterday sometime.  It's a 2-part interview---and the first installment starts at the 2:35 minute mark and runs until the 17:30 minute mark.  Then, after a five minute break/commercial, the interview starts again at the 22:40 minute mark---and ends at 43:10.

I've had no time to watch it as of yet, but it will be in the pile of things I have to read/listen to, before the weekend is done.

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‘Extraordinary hypocrite’: U.K. whistleblower says HSBC chief Douglas Flint ignored fraud for years

A whistleblower of HSBC fraud has denounced the bank’s chairman, Douglas Flint, as “an extraordinary hypocrite” following the financier’s suggestion that those who expose crime in Britain’s financial services sector should be rewarded and celebrated.

Flint made the comment at the launch of Britain’s Chartered Institute for Securities & Investment’s (CISI) “Speak Up” initiative launched on Tuesday. The program was set up to encourage financial services firms to adopt a policy that assists staff in reporting legislative, regulatory and company policy violations.

Calling on U.K. financial firms to take a more proactive approach to tackling misconduct in the workplace, Flint said firms should “encourag[e] the calling out of both good and bad behaviour” and reward and praise “those who escalate their concerns even if they are sometimes wrong”.

But HSBC whistleblower and financial campaigner Nicholas Wilson condemned Flint’s comments, insisting they were disingenuous. In an exclusive interview, Wilson told RT he had attempted to expose fraud in HSBC for years, yet Flint had turned a blind eye.

This article appeared on the Russia Today website at 1:14 p.m. Moscow time on their Thursday afternoon---and I thank Harry Grant for sending it our way.

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Six banks in U.K. talks over forex manipulation fines

Six banks have entered settlement discussions with the U.K.'s main markets regulator over the alleged manipulation of foreign exchange in what could amount to record fines.

Each of the banks -- Barclays, Citigroup, HSBC, JPMorgan Chase, Royal Bank of Scotland, and UBS -- are facing fines in the hundreds of millions of pounds from the Financial Conduct Authority, according to people familiar with the situation.

The settlement talks, which typically last eight weeks, are only with the FCA and do not include the United States or any other domestic regulator.

This Financial Times story showed up on their website yesterday sometime---and it's posted in the clear in this GATA release.

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Interim deal reached in Ukrainian gas row

Trilateral natural gas talks Friday in Berlin have resulted in temporary relief for Ukraine, delegates at the conference confirmed.

Russian, Ukrainian and European officials met in Berlin in an effort to avert a gas crisis for the upcoming winter.

Russia meets about a quarter of the gas needs for Europe, though the bulk of that volume runs through the Soviet-era transit system in Ukraine. Contractual woes in 2006 and 2009 forced Russian gas company Gazprom to cut gas supplies through Ukraine and European leaders are worried about a repeat of the crisis given ongoing acrimony between Kiev and Moscow.

The original headline to this UPI story, filed from Berlin yesterday, read "Ukraine, Europe, Russia make progress in gas talks"---and it's another contribution from Roy Stephens.

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The Threat of War and the Russian Response

U.S. actions in Ukraine should be classified not only as hostile with regard to Russia, but also as targeting global destabilization. The U.S. is essentially provoking an international conflict to salvage its geopolitical, financial, and economic authority. The response must be systemic and comprehensive, aimed at exposing and ending U.S. political domination, and, most importantly, at undermining U.S. military-political power based on the printing of dollars as a global currency.   

The world needs a coalition of sound forces advocating stability —in essence, a global anti-war coalition with a positive plan for rearranging the international financial and economic architecture on the principles of mutual benefit, fairness, and respect for national sovereignty.

CURBING THE ARBITRARINESS OF RESERVE CURRENCY ISSUERS

This coalition could be comprised of large independent states (BRICS); the developing world (most of Asia, Africa, and Latin America), which has been discriminated against in the current global financial and economic system; CIS countries interested in balanced development without conflicts; and those European nations not prepared to obey the disparaging U.S. diktat. The coalition should take measures to eliminate the fundamental causes of the global crisis.

Sergei Glaziev is an Advisor to the President of the Russian Federation---and a Full Member of the Russian Academy of Sciences.  This commentary of his showed up on the globalaffairs.ru Internet site on Tuesday---and it's certainly worth reading.  I thank Roy Stephens for sharing it with us.

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British parliament approves airstrikes against IS group in Iraq

The British parliament voted overwhelmingly on Friday to join a U.S.-led coalition against the Islamic State militant group. Belgium and Denmark also announced that they would join the international effort against the jihadists.

British lawmakers voted 524 to 43 in favour of military action, paving the way for the Royal Air Force to immediately join strikes targeting the Islamic State (IS) group, also known as ISIS or ISIL.

The vote came after Prime Minister David Cameron recalled parliament from recess to back military action following an official request from the Iraqi government.

This article appeared on the france24.com Internet site early this morning Europe time--and I thank Roy Stephens for his final offering in today's column.

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Three King World News Blogs

1.  Andrew Maguire [#1]: "Stunning 650 Tonnes of Gold Bought in Takedown"  2. Ronald-Peter Stoferle: "Concerned About the Gold and Silver Smash - Just Read This"  3. Andrew Maguire [#2]: "Final Stages of Historic Capitulation in Gold and Silver"

[Note:  Besides my usual disclaimer on our daily dose of hyperbole out of King World News that's posted below---I, and others, have some real issues with this 650 tonne figure---and here are just two of them.  This amount of gold represents almost 80 percent of the current contents of the GLD ETF---and 25 percent of yearly gold production.  Considering the fact that the goings-on inside the LBMA are totally opaque, I'd like to see some proof for what appears to be an outlandish claim. - Ed]

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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8 Stunning Images That Show How Much Natural Resources Are Mined Each Year

The market for precious metals is not as big as you might think.

One year's worth of mined platinum is only the size of a car. But it's worth about $8 billion.

Visual Capitalist took one year's production of eight commodities, lumped each of them into a three-dimensional cubes, and put them next to landmarks around the world.

They also calculated the value of each cube.

Wow!  Talk about a reality check!  This short, but truly amazing photo essay showed up on the businessinsider.com Internet site at 4:49 p.m. EDT on Thursday afternoon---and it's an absolute must read.  I was amazed---and you will be too!!!  I thank reader Harry Grant for his third offering in today's column.

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Cheapest way to buy Royal Mint gold? Not from the Royal Mint

For years the Royal Mint has sold collectible coins commemorating special events direct to the public.

But "bullion" coins made for investment purposes – such as Sovereigns, Britannias or Lunars (introduced last year) – have until now been available only through dealers.

Bullion coins are generally produced to a less perfect finish than special-edition coins made for collectors. This means their price tracks more precisely the value of the gold they contain. By comparison, collectable coins typically go on sale – initially at least – for substantially more than the value of the gold they contain.

From this week the Royal Mint offers a bullion-coin service through which individuals can buy as few as one coin at a time directly. Buyers create an online account and buy coins via the Mint’s website, where prices change constantly according to the gold market.

Once the transaction is complete the Mint dispatches the coins in insured mail which – for a "limited time" – is free within Britain.

This interesting essay appeared on the telegraph.co.uk Internet site at 8:14 a.m. BST on their Friday morning---and it's an article I found on the gata.org Internet site.

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German Bullion Dealers Report Major Increase in Sales

Suppressed prices for gold and silver are obviously considered buying rates by German investors. The German precious metals trade reports a surge in sales.

“For about a week we record considerably increased turnover again, which is now on previous year’s level, so it doubled compared to the recent months.”, Rene Lehman from the internet dealer Münzland in Dresden told Goldreporter.

“We can confirm that customer demand has considerably increased in the recent days.“, said Dominik Kochmann, CEO of ESG Edelmetalle in Rheinstetten.

Daniel Marburger, Director of Coininvest GmbH in Frankfurt/Main also stated that "In the past seven working days we have seen an extreme surge in demand."

Well, dear reader, as I said further up in today's column, bullion demand here in Edmonton---especially silver---has really taken flight at our store this week as well.  And since JPMorgan et al have put it on sale below the cost of production---why the hell not!!!  And that is investment advice---and the buyers have figured that out all by themselves!  This news item was posted on the German website goldreporter.de early yesterday evening Europe time---and I found it embedded in a GATA release.

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Mark O'Byrne: Death Of 'Safe Haven' Gold Greatly Exaggerated

It would appear to us that the factors that would make gold a safe-haven asset have not gone away. 

In fact these factors are strengthening, as described above. The only rational explanation appears to be that gold remains an investment safe-haven as it has always done, but that this is not yet being recognised by the price discovery process in the market.

Adding in the fact that there is a continued disconnect between, on the one hand, the global physical gold market primarily driven out of China and India, and on the other hand, the New York gold futures market and unallocated London bullion market on the other hand, then this disconnect should not be expected to persist over the medium term.

This is especially the case given the heightened geopolitical and macroeconomic risks. 

With the gold price not yet signalling the geopolitical and macroeconomic alarm bells that many would have expected it to, the question of gold price manipulation remains a valid question.

This must read commentary appeared on the Irish website goldcore.com on Friday.  It also showed up in a GATA release as well.

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Alasdair Macleod: Valuing gold and turkey farming

Defeating markets is the primary objective of central banking, GoldMoney research director Alasdair Macleod writes today, adding that it will come at the expense of hyperinflation, since debt is so overwhelming that interest rates, while already at zero, cannot be raised without collapsing the world economy.

Macleod's analysis is headlined "Valuing Gold and Turkey Farming" and it was posted on the goldmoney.com Internet site on Friday.  I found it posted on the gata.org Internet site yesterday---and it's worth reading.

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Koos Jansen: New Shanghai exchange discourages exporting gold from China

In the first installment of his review of the operations of the new Shanghai International Gold Exchange in Shanghai's free-trade zone, gold researcher and GATA consultant Koos Jansen writes, among other things, that the exchange seems designed to discourage export of gold from China.

Jansen's analysis is headlined "The Workings of the Shanghai International Gold Exchange, Part 1" and it's posted at the Singapore Internet site bullionstar.com early Thursday evening local time.  I found this gold-related story on the gata.org Internet site yesterday.  It's long---and a bit thick, but worth your while.  I stole 'all of the above' from another GATA release.

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Lawrence Williams: Hong Kong-China gold exports weak again, but does it matter?

Reported Hong Kong net exports of gold to mainland China were again at an extremely low level in August at a mere 21.1 tonnes.  In previous years the Hong Kong figures have been taken by global gold analysts as something of a proxy for total Chinese gold imports, even though gold was known to have entered the Chinese mainland by other routes, but this had been assumed to be in relatively insignificant quantities.  This year, though, China has eased the path to passage of gold through other ports of entry – notably Shanghai and Beijing – for which no data is forthcoming and given that this easing coincides with the apparent downturn in the Hong Kong figures, it could well be the case that imports via these alternative routes have been replacing gold which had previously come in via Hong Kong.

On the face of things, if one takes the Hong Kong figures for net gold exports to China alone (see table below), Chinese demand appears to have fallen by a massive 33% this year from 725 tonnes to 485 tonnes.  But this is belied by figures for withdrawals from the Shanghai Gold Exchange which are only down by around half this percentage, and which have been particularly strong in the past few weeks.  This has also coincided with price premiums over the London gold price again appearing in Shanghai.

This commentary by Lawrie was posted on the mineweb.com Internet site yesterday sometime---and it's also worth reading.

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Sep 26, 2014

U of T's Auerbach: Fed Has Created a $2.7 Trillion Time Bomb

The Federal Reserve has built a $2.7 trillion time bomb that will cause economic mayhem if not carefully diffused, says Robert Auerbach, a professor of public affairs at the University of Texas at Austin.

Although the Fed has pumped trillions of dollars into the economy since 2008, most of it has remained idle in the form of private bank's excess reserves it continues to hold, he writes in an article for The Huffington Post.

Excess reserves exploded under the former Fed Chairman Ben Bernanke and have continued soaring under current Chair Janet Yellen, from $1.6 billion in August 2008 — almost nothing in central bank terms — to $2.7 trillion as of Sept. 4, notes Auerbach, a former economist with the House Financial Services Committee, the U.S. Treasury's Office of Domestic Monetary Affairs and the Fed.

There's nothing really new here, but it's nice to be reminded that this potential inflationary bombshell still hangs over the market.  I doubt very much that interest rates on these excess reserves will be removed, as the interest created out of thin air on the excess reserves created out of thin air, are being used to recapitalize the banking system.  This news item appeared on the moneynews.com Internet site at 8:04 a.m. EDT on Thursday---and today's first story is courtesy of West Virginia reader Elliot Simon.

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James Grant: Don't get hysterical over deflation

Looking ahead to GDP data on Friday, with Jim Grant, founder and editor of Grant's Interest Rate Observer.  Grant outlines the risks to the U.S. economy.

This 1:53 minute video clip appeared on the cnbc.com Internet site at 3 p.m. yesterday afternoon---and its courtesy of reader Ken Hurt.

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Survey: Three Out of Four Americans Feel Like Recession Continues

Americans have a bleak view of the economy and their own financial situations, according to a new study from the Public Religion Research Institute.

While the Great Recession officially ended in June 2009, only 21 percent of Americans believe it's really over, while 72 percent believe it continues.

Only 7 percent of Americans report they are in excellent shape financially, while 34 percent say they're in good shape, 37 percent say they're in fair shape, and 20 percent say they're in poor shape.

Just 30 percent believe the economy has improved during the past two years, while 35 percent say it has worsened, and 33 percent say it is about the same.

This article put in an appearance on the moneynews.com Internet site at 8:20 a.m. EDT on Thursday morning---and it's the first offering of the day from Elliot Simon.

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Eric Holder is Resigning

Eric Holder Jr., the nation's first black U.S. attorney general, is preparing to announce his resignation Thursday after a tumultuous tenure marked by civil rights advances, national security threats, reforms to the criminal justice system and five and a half years of fights with Republicans in Congress.

Two sources familiar with the decision tell NPR that Holder, 63, intends to leave the Justice Department as soon as his successor is confirmed, a process that could run through 2014 and even into next year. A former U.S. government official says Holder has been increasingly "adamant" about his desire to leave soon for fear he otherwise could be locked in to stay for much of the rest of President Obama's second term.

Holder already is one of the longest serving members of the Obama cabinet and ranks as the fourth longest tenured AG in history. Hundreds of employees waited in lines, stacked three rows deep, for his return in early February 2009 to the Justice Department, where he previously worked as a young corruption prosecutor and as deputy attorney general — the second in command — during the Clinton administration.

This NPR news item showed up on the Zero Hedge website yesterday---and it's courtesy of reader 'David in California'.

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N.Y. officials downplay subway attack reports

Iraq's prime minister said Thursday that captive militants for the Islamic State of Iraq and Syria (ISIS) told his intelligence agents of an alleged plot to attack subways in the United States and Paris.

U.S. law enforcement officials told CBS News they are investigating the threat, but as of overnight, there was still no intelligence on any credible specific plot against the U.S.  A half-dozen French officials contacted by The Associated Press said they knew of no plot.

FBI Director James Comey told reporters Thursday afternoon that he was unaware of any threat directed at U.S. subways.

Not that I have a suspicious mind, but currents events in the Middle East are the perfect cover for the powers-that-be to drop another 9/11 event [or more than one] on the world.   I found this CBS story from yesterday in a Zero Hedge piece---and it's the second article in a row from reader 'David in California'.

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G7 Urges to Continue Trilateral Talks Between EU, Ukraine, Russia

The foreign ministers of G7 countries stressed the importance of continuing trilateral talks between the European Union, Russia and Ukraine in a joint statement on Thursday.

"We welcome that the trilateral talks between Ukraine, Russia and the EU will continue. It is equally important to continue the discussions between Russia, Ukraine and the EU on resolving outstanding energy issues," reads the statement, released by the foreign ministers of Canada, France, Germany, Italy, Japan, the United Kingdom, the United States and High Representative of the European Union.

On September 12, Russia, Ukraine and the European Union held a trilateral meeting, which resulted in a compromise to put off the implementation of Kiev's free trade pact with the EU until December 2015.

This story is from the RIA Novosti website---and it was posted there just after midnight Moscow time on their Friday morning---and I thank Roy Stephens for his first of many contributions to today's column.

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E.U. to discuss lifting sanctions against Russia in October — diplomatic source

The European Union may begin discussions on lifting sanctions against Russia in October, and lifting the first block of sanctions is not probable before November, a European diplomatic source told ITAR-TASS on Friday.

The source said the de-sanctions' process may be organized only on the step-by-step basis depending on development of the situation in Ukraine.

The diplomat said about two possible ways of lifting sanctions, “where both are on the step-by-step basis, and lifting of the entire block at a time will not be possible.”

This story, filed from Brussels, showed up on the itar-tass.com Internet site on Friday morning Moscow time---and it's another contribution from Roy Stephens.

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Kremlin ready for energy company bailout

Russian energy companies feeling the squeeze from Western economic sanctions can appeal for help from the government, the deputy energy minister said Thursday.

Russia relies heavily on oil and natural gas revenues to support its economy. When sanctions targeting Russian energy companies went into force earlier this year, Andrei Belousov, an economic adviser to the Kremlin, said the Central Bank of Russia may sell some of its foreign currencies to blacklisted companies in an effort to offset the punitive measures.

Deputy Energy Minister Kirill Molodtsov said Thursday the federal government was on standby should sanctions-strapped companies need support.

"In a situation when the companies came under sanctions, they can appeal to the government for support, if there is such a need," he said.

This UPI story, filed from Moscow, appeared on their Internet site at 9:03 a.m. EDT yesterday morning---and I thank Roy Stephens for bringing it to our attention.

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What is to be done about a world where everything is for sale?

Next time you read about an auctioneer’s gavel coming down on a $150 million painting bought by some flunkey representing the ruling family of Qatar, don’t ooh or aah, but think of those monsters in Iraq and Syria who have their children pose on video while holding up the severed heads of innocents. And no, it’s not a stretch — without Qatar’s gold Islamic State would not exist, not even in the movies.

Let me put it another way: had Calvin Coolidge or Herbert Hoover given White House dinners for Al Capone, the outcry would have been heard all the way down to Patagonia. Yet, as reported in these here pages by Charles Moore, not only did the head of the family lunch with the Queen at Windsor, a cousin and his mother also lunched the next day at Windsor and caused a stir because they were not included in the Queen’s carriage. They sponsored Ascot this year, and Elizabeth Anson was their PR person. She burst into tears after failing to include them in the lead carriage. All I can say is shame on Ascot, more shame on Anson, and eternal shame on the stuffed shirts who forced the Queen to break bread with these characters.

They say Brits will do anything for money, but the rest of the Western world is just as bad. Just look at how a tiny Gulf nation of 250,000 goatherds managed to land the World Cup in 2022. To call the bribes Qatar must have paid to Fifa delegates colossal would be an understatement. But forget the 50-degree-Celsius heat and that football is unplayable in that hellhole, the scandal of modern-day slavery as practised by the Qataris is a far bigger depravity, overlooked by the West. In fact, calling foreign workers indentured servants is a euphemism; they are modern-day slaves. Foreign workers do not enjoy a minimum wage in Qatar, nor do they have any rights. They are not allowed to change jobs, however feudal the conditions, get a driving licence, rent a room or open a checking account unless they have their employer’s permission. Thousands have died while working in appalling conditions (hundreds of Nepalese alone), which provoked an investigation by the Norway-based Global Network for Rights and Development, which sent a researcher and a photographer. Last week the Qatari government confirmed that the two have been arrested and are in prison. So much for European influence in that sweaty hellhole.

This very interesting article appeared on the spectator.co.uk Internet site on Sunday---and I thank South African reader B.V. for sharing it with us.

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Welcome to Barack Obama’s Syrian Gong Show

Folks, this war is only three days old and its already a gong show. Its become at least a four-front affair—with Obama’s “broad” coalition amounting to little more than a few stealth Arab nations renting back to Washington the equipment and American trained pilots it had earlier provided them.

The President’s shock-but-not-awe campaign apparently incepted not with bombs on the Islamic State’s capital of Raqqah but via a tomahawk barrage on some Nusra Front rebels in northwestern Syria. These were anti-regime fighters of the not-so-moderate persuasion who had been recently driven there after a bloody struggle with ISIS. As explained by the WSJ:

In July, the Islamic State routed its rivals including the Nusra Front and allied Islamist rebels from eastern Syria and they are now concentrated in the western half of the country, where they are fighting the regime along with other factions.

So these folks were fighting both of Washington’s declared enemies—–the Assad regime and ISIS—but it obliterated them anyway, and some of their women and children, too. That apparently makes for a three-front war, as the WSJ further explained---

This long commentary by David Stockman appeared on his website on Thursday sometime---and I thank reader U.D. for passing it around.

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Malaysian P.M. --- Kiev not naming concrete schedule for experts to enter Boeing crash site

The Ukrainian government could not provide a concrete schedule when international experts could enter the Boeing crash site in eastern Ukraine, Malaysian Prime Minister Najib Razak said after meeting with his Ukrainian counterpart Arseniy Yatsenyuk in New York.

“Kiev cannot give us any guarantees, including on the date of access, and we have to depend on them. According to Yatsenyuk, armed clashes still continue in the area, that’s why it is impossible to get to the crash site,” Mr. Najib said on Wednesday.

Asked whether Malaysia could initiate talks with self-defense militias to allow safe passage of the team, Najib said a “communication line” is still open but Kiev’s sensitivity should be taken into consideration.

The Malaysian prime minister stressed that international experts should get to the site ahead of the winter season that could affect the forensic evidence. He also expressed concerns over unclaimed remains of passengers and the crew of the crashed plane.

This RIA Novosti article appeared on their website at 10:40 a.m. Moscow time on their Thursday morning---and it's another story courtesy of Roy Stephens.

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Japan’s Abe Confirms Plans to Meet Russian President, Date to Be Fixed

Japanese Prime Minister Shinzo Abe confirmed early Friday he still hoped to meet with Russian President Vladimir Putin, although no date had been set for Putin's visit to the island nation yet.

"As for Vladimir Putin's visit to Japan, I do hope that it will take place, although his agenda is still to be set," Shinzo Abe said at a press conference.

"We had a phone talk [with Putin] on my birthday, September 21. We agreed to continue a dialogue between our nations," Abe told journalists.

This short article appeared on the RIA Novosti website at 4:16 a.m. Moscow time this morning, which was 8:16 p.m. Thursday evening in New York---and it's the final offering of the day from Roy Stephens.

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Three King World News Blogs

1. Bill Haynes: "Stunning Demand" One Individual Buying $40 Million of Gold  2. Egon von Greyerz: "Global Market Collapse and Wealth Destruction is Now Upon Us"  3. John Hathaway: "Absolutely Stunning Developments in Gold"

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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Gold Downside Risk Seen ‘Significant’ to Goldman Sachs

Goldman Sachs Group Inc.’s Jeffrey Currie says the worst isn’t over yet for gold after prices erased almost all of this year’s gain.

“Risks are significantly skewed to the downside,” said Currie, who told investors to sell last year before gold’s biggest collapse since 1980. “Much of the support was coming from political uncertainty in Ukraine and what was going on in Middle East,” and those concerns have faded, he said in a telephone interview yesterday.

After bullion’s rally in the first half of the year beat gains for commodities, equities and Treasuries, the metal is heading for its first quarterly decline in 2014. Demand for precious metals as a protection of wealth has been eroded by the outlook for a strengthening U.S. economy, which helped spark a rally in the dollar as the Standard & Poor’s 500 Index of equities surged to a record this month.

With bulls hit stories like this, you'd think that Currie's hand has to be shaking a little when he reaches for his paycheque/paycheck.  Like John Hathaway and many others, Jeffrey Currie will never talk about the real reason why precious metal prices are in the dumps, even though they all know better.  This Bloomberg story, filed from New York, was posted on their Internet site at 6:38 a.m. Denver time on Thursday morning---and I found it on the Sharps Pixley website.

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U.K. moves to extend Libor rigging laws to oil, gold and currency markets

Traders who manipulate key oil, gold and currency benchmarks will be handed the same huge fines or jail sentences as those who rig Libor under government proposals to tackle market abuse.

The Treasury launched a formal consultation on Thursday to extend the new legislation to cover the foreign exchange, fixed income and commodity markets. Under the proposals, the legislation would cover the London Gold Fixing and the LMBA Silver Price, which determine the price of the precious metals in the London market.

Also targeted is the ICE Brent futures contract, "which acts as the crude oil futures market's principal financial benchmark", the Treasury said.

“The integrity of the City matters to the economy of Britain. Ensuring that the key rates that underpin financial markets are robust, and that anyone who seeks to manipulate them is subject to the full force of the law is vital," said Andrea Leadsom, economic secretary to the Treasury.

That's all very cute, but as I've said before---and in my presentation at the Casey Summit on Sunday---it's not the fixes that matter, it's the bias between the morning and afternoon gold fix.  It has been negative every year since 1975.  I'll have a chart on this in The Wrap section.  This story appeared on the telegraph.co.uk Internet site at 11:13 a.m. BST on their Thursday morning---and I thank reader "Roger in La La Land" for sending it along.  Phil Barlett sent us the Bloomberg take on this.  It's headlined "U.K. Seeks to Criminalize Manipulation of 7 Benchmarks".

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LBMA names Citigroup as gold and silver market maker

The London Bullion Market Association (LBMA) said on Thursday it appointed Citigroup as a market maker, underscoring the bank's ambitions to expand into the precious metals sector while others are exiting due to regulatory concerns.

LBMA said it named Citibank, a unit of Citigroup, as a spot market-making member effective Thursday. Currently, LBMA has 12 market makers that serve in either one, two, or all three of the spot, forwards, and options markets. They make markets by quoting two-way prices in both gold and silver products to other market makers.

This just exchanges one crook for another.  Exit Deutsche Bank---enter Citibank.  Please move along, nothing to see here.  This Reuters story, filed from New York, appeared on their Internet site at 3:40 p.m. EDT yesterday---and I found it on the gata.org Internet site.

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Silver, Gold and Currencies Revalued Overnight - Mike Maloney

In this video, Mike explains the mechanics behind what he sees coming: short term deflation followed by big or even hyperinflation as central banks try to print their way out of the mess they have created. The result is the same as it has always been throughout history, with gold delivering either a technical knockout or a complete decimation of currency.

No surprises here, as many analysts, including myself---have been discussing this for years.  It's just the timing that remains unknown.  This 9:02 minute video clip was posted on the youtube.com Internet site on Wednesday---and it's certainly worth your time.

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Weak gold price has Dubai consumers clamoring for more

With local gold prices dipping below the 140 dirhams a gram (for 22-karat) level for the first time this year, it was enough to unleash a manic round of buying at jewellery stores in the United Arab Emirates and the Gulf over the weekend. If the current levels -- of around Dh140 -- can sustain itself, it could lead to a surge in buying ahead of the key festivals of Eid and Diwali next month, industry sources say.

Industry feedback suggests that on Friday itself nearly 1.5 tonnes of gold could have been bought at retail level transactions across the Gulf, with the UAE accounting for nearly half of that. On Monday, with the price at Dh139.25 a gram, the level of consumer interest was sustained.

"The month with Diwali" -- the Indian festival when buying jewellery is rated as auspicious -- "represents a peak buying period for the trade in the Gulf, and this year it's doubly so with Eid also falling in the same month," said Shamlal Ahmad, director of International Operations at Malabar Gold & Diamonds. "Shoppers are clearly bringing forward their purchases to make use of the soft prices."

This positive gold-related story, filed from Dubai, appeared on the gulfnews.com Internet site at 5:31 p.m. local time on their Wednesday afternoon---and it's definitely worth reading.  I found it embedded in a GATA release yesterday.

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With 50 Tonnes of Gold Smuggled in 10 Days, India's Physical Gold Premiums Set to Double

As the price of precious metals that is eschewed daily by status-quo-hugging talking-heads on business media as indicative of the days of hard money being over continues to come under 'pressure', demand for physical gold remains extremely high. With India's festive season about to begin, The Hindustan Times reports a massive surge in gold smuggling in the last 10 days as heavy demand for gold during Dussehra (for which booking and supply starts today when Navratri begins) has dragged 50 tonnes of gold across the borders to avoid the government's capital controls. As Bloomberg adds, physical gold premiums may double by the end of October.

This is really two stories in one, so you can pick and chose, or read both of them---and they're both worth you while.  It was posted on the Zero Hedge Internet site at 9:11 a.m. EDT on Thursday morning---and I thank reader M.A. for finding it for us.

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Currency Wars Deepen - Russia, Kazakhstan Buy Very Large 30 Tons of Gold in August

Latest official gold reserve data from the International Monetary Fund (IMF) shows that Russia again added to its gold reserves in August, with the Central bank of the Russian Federation purchasing  232,510 ozs (7.23 tonnes) and bringing its total gold reserves to 35.769 million ozs or 1,112.5 tonnes. 

Likewise, the National Bank of Kazakhstan purchased a massive 795,213 ozs or 24.7 tonnes in August bringing its total gold reserves to 5.848 million ozs (181.9 tonnes).

Turkey was also a gold buyer in August and the Turkish central bank adding 96,783 ozs (3 tonnes) to bring its total official gold reserves to 16.45 million ozs (511.6 tonnes), which is the world's 12th largest official gold holding.

According to the IMF data, other countries which added to their gold reserves in August included the central banks of Azerbaijan and Ukraine.

This commentary was posted over at the goldcore.com Internet site yesterday---and its definitely worth reading.

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Sep 25, 2014

NYSE Margin Debt Is Drifting Higher Again

The New York Stock Exchange publishes end-of-month data for margin debt on the NYXdata website, where we can also find historical data back to 1959. Let's examine the numbers and study the relationship between margin debt and the market, using the S&P 500 as the surrogate for the latter.

Unfortunately, the NYSE margin debt data is about a month old when it is published. Following its February peak, real margin declined sharply for two months, -3.9% in March -3.2% in April and was flat in May. It then jumped 5.7% in June, its largest gain in 17 months. June saw a 0.9% decline, but the August number has drifted higher, up 0.6%, and is now only is 1.9% below the February peak.

This article, with three excellent charts, appeared on the businessinsider.com Internet site at 3:37 p.m. EDT on Wednesday afternoon---and today's first story is courtesy of reader U.D.

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Hussman: The U.S. Economy Is Becoming a Ponzi Scheme

The United States has evolved into a nation with a Ponzi economy, in which the continuous expansion of debt is the only thing that keeps prosperity alive, according to Federal Reserve critic John Hussman.

In his weekly commentary, Hussman, founder of the eponymous Hussman Funds family of mutual funds, said the U.S. economy appears fine on the surface, but that capital accumulation and labor force participation have buckled below – with dire prospects for the American future.

"Over time, growth in the standard of living is chained to and limited by growth in productivity," he wrote.

"When the most persistent, most aggressive and most sizable actions of policymakers are those that discourage saving, promote debt-financed consumption and encourage the diversion of scarce savings to yield-seeking financial speculation rather than productive investment, the backbone that supports a rising standard of living is broken."

This excellent article showed up on the moneynews.com Internet site at 7:01 a.m. EDT yesterday---and I thank West Virginia reader Elliot Simon for sharing it with us.

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Kyle Bass on CNBC

This 1:07 minute CNBC video clip with Kyle has obviously been heavily edited, but it's certainly worth your time---and I thank reader Ken Hurt for sending it our way.

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David Stockman: The Fed’s Credit Channel is Broken and Its Bathtub Economics Has Failed

Among the many evils of monetary central planning is the conceit that 12 members of the FOMC can tweak the performance of a $17 trillion economy on virtually a month to month basis—using the crude tools of interest rate pegging and word cloud emissions (i.e. “verbal guidance”). Read the FOMC meeting minutes or the actual transcripts (with a five-year release lag) and they sound like an economic weather report. Unlike the TV weathermen, however, our monetary politburo actually endeavors to control the economic climate for the period immediately ahead.

Accordingly, the Fed is preoccupied with utterly transient and frequently revised-away monthly release data on retail sales, housing starts, auto production, business investment, employment, inflation and the like. But its always about the latest ticks in the data—never about the larger patterns and the deeper longer-term trends.

And of course that’s the essence of the Keynesian affliction. The denizens of the Eccles Building—-overwhelmingly academics and policy apparatchiks—-rarely venture into the blooming, buzzing messiness of the real economic world. They simplistically believe, therefore, that the US economy is just a giant bathtub that must the filled to the brim with “aggregate demand” and all will be well.

This longish essay by David appeared on this Internet site yesterday sometime---and I thank Roy Stephens for his first offering of the day.

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Joesph Stiglitz — "The U.S. will always pay its debt. Because it just prints the dollars."

"Let me assure you the U.S. will always pay its debt. How do I know that? If you borrow money from the United States you get a piece of paper, a bond. And what does the paper say? We promise to pay, say a thousand dollars. How do I know the United States could always pay that? Because they just print those dollars. You know, you can imagine a temporary shortage of electricity and the printing press didn't work but apart from that it is inconceivable that we would not... we promise to pay you these little pieces of paper, you were foolish enough to accept that promise, and we will deliver those pieces of paper. But Greece can't deliver those pieces of paper. When it borrowed in drachma it could deliver those pieces of paper called drachma. But now it promises to pay in euros and it doesn't control the printing of the euros. That's done from Frankfurt. And so they can't get access to those euros. So in essence the euro created the potential for sovereign debt crises in Europe. A problem that had not been there before." - Joseph Stiglitz, The Future of Europe, UBS International Center of Economics in Society, University of Zurich, Basel, January 27, 2014

The arrogance of this little twerp is evident in the contempt he holds the audience as he says these words---and the link to that video, along with a few other choice quotes of his, were posted at the mikenormaneconomics.blogspot.de Internet site on Tuesday---and my thanks go out to Michael Cheverton for bringing it to our attention.  It's worth your time.

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Don’t Be a Freedom Wimp: Live from the Casey Research Summit in San Antonio

On Day Two of the Casey Research Summit in San Antonio, the emphasis was decidedly on the “deep state,” as Doug Casey termed it: what it is, what it’s doing, and how to thrive despite its ubiquitous reach.

The deep state begins with government, an institution Doug describes as intrinsically evil and destructive. That’s because it’s empowered by enforced coercion—one of only two ways in which humans interact with one another (the alternative being voluntary co-operation).

But the deep state is more. It’s not only the massive, prying, regulating apparatus of the federal government, but also the corporate structure that depends on government largess, and the lapdogs in the media and academic community that serve to perpetuate its message. All of these elements are held together with money and propaganda, and they combine to deny the vast majority of citizens true freedom.

Doug described America’s “top dogs”—a few thousand elites who all know each other. They went to the same schools, belong to the same clubs, socialize amongst themselves, and scratch each other’s backs. No conspiracy needed. They all know exactly what to do to maintain their position without being told. It’s a closed party, and as Doug said, “We ain’t invited.”

This short commentary on Doug's speech was written by Doug Hornig---and was posted on the Casey Research website yesterday---and is worth reading.

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Barclays Fined Twice in One Day for Compliance Failures

Barclays Plc was fined twice in one day for client account failures in the U.K. and the U.S., hurting the bank’s effort to rehabilitate a tarnished image. It agreed to pay a total of $77 million in penalties.

The bank will pay $15 million to the Securities and Exchange Commission to settle claims that its U.S. wealth-management business failed to maintain an adequate internal compliance system and made trades and charged commissions without client approval.

In the U.K., Barclays agreed to pay 38 million pounds ($62 million) to Britain’s market regulator for failing to properly protect 16.5 billion pounds of client assets between 2007 and 2012. Flaws in account naming or data suggested assets belonged to Barclays instead of its clients, which could have caused customers to lose money if the bank became insolvent, the Financial Conduct Authority said.

Once a crook---always a crook!  This Bloomberg news item appeared on their website at 5 p.m. Denver time on Tuesday afternoon---and it's the second contribution of the day from Elliot Simon.

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French business leaders target minimum wage, public holidays

France’s famously generous employment rights could be a thing of the past if radical new proposals unveiled by business leaders are adopted, though fierce opposition from politicians and trade unions are likely to prevent that from happening.

Employers’ association Medef announced its proposals, which it said will help create one million new jobs over five years, in a 100-page document on Wednesday, though details had already been leaked to the press earlier this month.

They include plans to reduce the number of public holidays, relax minimum wage laws and alter France’s historic 35-hour working week law to allow employees at certain companies to work longer hours without receiving overtime payments.

These drastic changes are needed if France is to revive its flagging economy and tackle its pressing unemployment problem, the report says – the latest figures put the number of jobless in France at a record high of almost 3.5 million as of July, an 0.8 percent increase on the month before and the ninth consecutive monthly rise.

This article appeared on the france24.com Internet site yesterday yesterday---and I thank South African reader B.V. for finding it for us.

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Germany's Ukip threatens to paralyse eurozone rescue efforts

The stunning rise of Germany’s anti-euro party threatens to paralyse efforts to hold the eurozone together and may undermine any quantitative easing by the European Central Bank, Standard & Poor’s has warned.

Alternative für Deutschland (AfD) has swept through Germany like a tornado, winning 12.6pc of the vote in Brandenburg and 10.6pc in Thuringia a week ago. The party has broken into three regional assemblies, after gaining its first platform in Strasbourg with seven euro-MPs.

The rating agency said AfD’s sudden surge has become a credit headache for the whole eurozone, forcing Chancellor Angela Merkel to take a tougher line in European politics and risking an entirely new phase of the crisis. “Until recently, no openly Eurosceptic party in Germany has been able to galvanise opponents of European 'bail-outs’. But this comfortable position now appears to have come to an end,” it said.

This Ambrose Evans-Pritchard story showed up on the telegraph.co.uk Internet site at 9:50 p.m. BST on their Tuesday evening---and the first reader through the door with this story yesterday was Roy Stephens.

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German Central Bank Head Weidmann: 'The Euro Crisis Is Not Yet Behind Us'

An extended period of calm on the bond markets has led many to conclude the euro crisis is over. But German central bank head Jens Weidmann says in an interview that the coast still isn't clear and that there is still great need for reforms.

SPIEGEL: Mr. Weidmann, you are notorious for being a tough critic of European Central Bank President Mario Draghi. But the euro crisis seems to be over, largely thanks to ECB intervention. Has he not been proven right?

Weidmann: It's not about being right or a personal confrontation. When it comes to extremely important monetary policy decisions, the ECB Governing Council does its utmost to find the correct path. And the decisions are so difficult because the crisis is not yet behind us, even if the current calm on the financial markets might suggest as much.

SPIEGEL: Yet Spain, once wracked by the euro-zone crisis, can today borrow money more cheaply than ever before in the history of the monetary union. Do you not think that is a consequence of Mario Draghi's 2012 pledge to save the euro "whatever it takes"?

This interview appeared on the German website spiegel.de at 1:00 p.m. Europe time yesterday afternoon---and it's another story courtesy of Roy Stephens.

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Edward Snowden wins Sweden's 'alternative Nobel prize'

Fugitive U.S. intelligence leaker Edward Snowden is one of the winners of the 2014 Right Livelihood Award, described as Sweden's "alternative Nobel prize".

He splits the honorary award with Alan Rusbridger, editor of U.K. newspaper The Guardian, which wrote extensively on government surveillance, based on his leaks.

Cash prizes went to three activists from Pakistan, Sri Lanka and the U.S.

Mr. Snowden's award seems to have caused embarrassment in Sweden.

This news item was posted on the bbc.com Internet site at 11:30 a.m. EDT on Wednesday---and this article is the second contribution of the day from reader B.V.

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Russia tops ISIS threat, Ebola worst of all? Lavrov puzzled by Obama’s U.N. speech

Following the U.S. President’s speech at the UN, Russian FM Sergey Lavrov was puzzled with Barack Obama’s ranking of international threats: deadly Ebola virus top, followed by so-called Russian aggression and ISIS in Syria and Iraq only third?

Gathered at the U.N. headquarters in New York, the world leaders attending the 69th General Assembly heard Barack Obama highlighting the three most significant global threats today.

“As we gather here, an outbreak of Ebola overwhelms public health systems in West Africa, and threatens to move rapidly across borders. Russian aggression in Europe recalls the days when large nations trampled small ones in pursuit of territorial ambition. The brutality of terrorists in Syria and Iraq forces us to look into the heart of darkness,” the U.S. leader said at the beginning of his statement.

Reacting to the speech, Russia’s Foreign Minister Sergey Lavrov spoke with astonishment.

This news story appeared on the Russia Today website at 7:47 p.m. Moscow time on their Wednesday evening, which was 1:47 p.m. EDT.  Harry Grant beat Roy Stephens by 6 minutes on this story which arrived in my in-box at 11:47 p.m. last night.

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Death threats for Saudi pilots after raids on jihadists

Saudi pilots who conducted air strikes on jihadists in Syria received online death threats Wednesday after photos were published of those involved, among them a son of the crown prince.

The official Saudi Press Agency (SPA) released photographs of eight airmen it said were involved in Tuesday's US-led operation, carried out with Gulf allies.

In one picture they stood, some smiling, in green flight suits with arms around each other in front of one of their fighter jets.

One of the pilots involved in the raids is a son of Crown Prince Salman bin Abdul Aziz himself, according to Saudi newspapers.

This AFP article appeared on the france24.com Internet site at 4:05 p.m. Europe time yesterday afternoon---and I thank reader B.V. for bringing it to my attention, and now to yours.

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Eric Sprott: Ebola, the tipping point

We are currently in the midst of the largest ever Ebola outbreak in Western Africa, and this could just be the beginning. The number of cases and deaths has risen steadily, from a handful of people in Guinea at the end of March 2014 to several thousand now (Figure 1), not only in Guinea, but in Liberia, Sierra Leone, recently extending to Nigeria and the Democratic Republic of Congo (DRC).

A key metric to understand just how severe the epidemic can become is the basic reproductive rate, or R0, which measures the number of cases an infected patient generates while he is in his infectious period. A 2007 research paper by epidemiology experts at the “Université Pierre et Marie Curie” in Paris have found that Ebola has a R0 of about 2.7, which means the number of cases can multiply at a very fast pace. One of the key recommendations from the study is to implement control measures rapidly to prevent the spread of the epidemic. They say that increasing hospitalization rates significantly reduces the predicted epidemic size.

Unfortunately, the world’s response to this crisis has been nothing short of underwhelming; according to the World Health Organization (WHO), the seriousness of this Ebola crisis has been “underestimated” by authorities, meaning that they really have no idea of how many people are currently infected. More recently, the WHO declared that if left unchecked, the epidemic could affect over 20,000 people within 9 months. In reality, it could be even more given the historical R0 of the disease and the lack of proper health care infrastructure.

This eye-opening essay by Eric showed up on the sprott.com Internet site yesterday---and it's definitely worth reading.

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"Get To Work Mr. Chinese Chairman": China Set To Fire Its Central Bank Head, Unleash The Liquidity Floodgates

In what is certainly the most important news of the day, The Wall Street Journal reports that China's long-serving central banker Zhou Xiaochuan, "the face of the Chinese economy to markets globally" is about to be given the boot.

According to the WSJ, "Chinese leader Xi Jinping is considering replacing Mr. Zhou, say party officials, as part of a wider personnel reshuffle that also comes after internal battles over economic reforms." And while it is true that at the age of 66, Zhou has passed China's retirement age, and his departure will be spun as an old man spending more time with his family, the reality is that this is part of a major Chinese shift in the "balance of power between reformist and reactionary forces, with the momentum for reforms being eroded by the loss of growth momentum in the economy," said Eswar Prasad, a Cornell University China expert.

Zhou's replacement: a career banker, who will do the bidding of, you guessed it, banks, which means "liquidity to the max." Per the WSJ, "The top contender to succeed Mr. Zhou at the People's Bank of China is Guo Shuqing, a former banker and top securities regulator who is currently governor of Shandong, a prosperous eastern province, the officials said."

This Zero Hedge article put in an appearance on their website at 11:12 a.m. EDT on Wednesday morning---and I thank reader 'David in California' for passing it around yesterday.  It's longish, but worth skimming, at least until your eyes start to glaze over.

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Jim Rickards from Alice Springs, Australia

Jim's next speaking engagement after Alice Springs was at Casey Research's Summit in San Antonio.  Surprisingly enough, I ran into Jim on the Alamo tour last Thursday afternoon---and he was jet lagged and pretty bagged.  But after a good night's sleep, he was up up and at 'em as the opening speaker on Friday morning.  I don't know how he does it.

This youtube.com video runs for 42:34 minutes---and it is, of course, courtesy of Harold Jacobsen.

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Three King World News Blogs

1. Gerald Celente: "Increased Worldwide Danger to Rock Gold Market"  2. David P: "Despite Drop, Gold Coiled to Break $2,000 and Silver Above $70"  3. Jeffrey Saut: "Quote of the Week---and a Chart That Will Stun Global Readers"

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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Gold price seen near tipping point for mine cuts, closures

The price of gold, down more than a third in three years, is approaching the tipping point where the mining industry would see a spike in the number of producers reducing output or even shutting down operations.

Several mines globally have already suspended output in the past 18 months, but not as many as industry watchers expected as producers focused on slashing costs and reworking mine plans to extract more profitable, higher-grade ounces.

But with bullion's slide this week to a nine-month low of $1,208.36 an ounce, those defenses may not be enough.

"$1,200 is a critical level. The industry has geared itself around $1,200," said Joseph Foster, portfolio manager at institutional investor Van Eck Global. "If it falls below that level, then there are a lot of mines around the world that are really going to struggle."

This Reuters article, filed from Vancouver, showed up on their website at 1:07 a.m. EDT this morning---and I thank reader Harry Grant for sliding it into my in-box just before midnight MDT last night.

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Royal Canadian Mint Introduces One Gram Size Gold Maple Leaf Bullion Coins

The Royal Canadian Mint’s Gold Maple Leaf bullion coin is now available in a new one gram size. The coins are packaged into sets of 25 and referred to as the “Maplegram 25″ product.

“The Royal Canadian Mint always strives to innovate and diversify its products to offer customers new ways to own high-quality precious metals which set new standards for the global bullion industry,” said Marc Brûlé, Interim President and CEO of the Royal Canadian Mint. “The Mint’s new Maplegram25 product gives investors a novel way to purchase Gold Maple Leaf bullion coins in a highly liquid format that preserves and celebrates all the trademark qualities of the Maple Leaf brand.”

Because of their tiny size, I'm sure the premium over spot will be quite hefty.  This is no way to buy gold bullion for investment purposes, so stay miles away from this product unless you just have to own one for its novelty value.  This story appeared on the mintnewsblog.com Internet site yesterday sometime---and it's the final offering of the day from Elliot Simon.

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Rickards tells Anglo Far-East the methods, objectives, and perps of gold market rigging

*Cease fire in Ukraine holding, Putin is getting what he wants
*What is driving the current drop in the gold price, entry points?
*Proper portfolio allocation to gold
*Comprehensive review of gold price manipulation, techniques, and proofs
*Motives, players, tools
*The end game is in view, what is it?

John Ward interviews Jim in this audio podcast done on September 17 that was posted on the physicalgoldfund.com Internet site yesterday---and it's courtesy of Harold Jacobsen.  It runs for just under 45 minutes, so it may be a good idea to pop the top off a cold one before you dig in.  I borrowed the headline from the GATA release on this interview---and Chris Powell's introduction is worth the read as well.  The link to that is here.

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Sep 24, 2014

Mortgage Originations Down By 60-70%…..But Everything Is OK!

Mortgage originations for the first quarter of this year fell off a cliff.  JPMorgan reported a decline of 71 percent, as I recall, and I think Citibank reported a drop of 66 percent.  Now, the second quarter’s bloodletting has come in and the numbers are about the same… down more than 60 percent year-over-year, if memory serves and it often does.

I’m not bothering to look any of these numbers up and doing this by memory because the details don’t matter… my point will be the same regardless of a few percentage points in one direction or another on any given statistic.  I’m close enough in all cases, anyway.

Forbes reported that the first quarter of 2014, “saw the lowest mortgage origination volumes since Q3 1997.”  And the headline, “MBA Lowers Mortgage Originations Forecast, came with a story explaining thatthe updated refinance total is around 60 percent lower than 2013 refinance originations.”

Even credit unions went straight into the tank this year, originating an annualized $42.6 billion in real estate loans in the first quarter, down from $102.9 billion in the first quarter of 2013, according to an Nation Credit Union Association (NCUA) press release.

This longish, but very interesting guest commentary appeared on David Stockman's website yesterday---and I thank Roy Stephens for today's first news item.

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Shrinking Bond Desks Taken by Journeymen as Masters Fade

It was the profession that inspired Sherman McCoy in the novel “The Bonfire of the Vanities.” In the 1980s, the excitement in the trading room, with hundreds of people talking on the phone, was palpable, like a sporting event, said Kerry Stein, head of credit trading at Lloyds Securities Inc.

Those days are gone.

“It’s surprising how quiet a place could be compared to what I had known,” said Stein, who began trading bonds in 1985 at Drexel Burnham Lambert Inc., the house of Michael Milken, who was nicknamed the junk-bond king.

As trading in dollar-denominated bonds declined 22 percent in the past five years to an average daily $809 billion, so have the jobs, leaving even some of the most senior traders and salesmen moving from firm to firm. Dozens of journeymen are populating an industry that used to attract the young in throngs, lured by money and prestige, according to Michael Maloney, president of fixed-income recruiting firm Michael P. Maloney Inc.

This news item appeared on the Bloomberg Internet site at 7:52 a.m. Denver time on Tuesday morning---and I thank West Virginia reader Elliot Simon for sending it our way.

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Record-breaking year for contemporary art

The contemporary art market, buoyed by high demand and massive growth in China, smashed through the $2-billion mark for the first time in a record-breaking 2013/14, according to new figures released on Tuesday.

In the year from July 2013, sales of contemporary art at public auctions reached $2.046 billion dollars, up 40 percent on the previous year, according to Artprice, a Paris-based organisation which keeps the world's biggest database on the contemporary art market.

This growth, despite a gloomy global economic climate, came as China pushed past America to top the world market by raking in 40 percent of auction earnings.

"As many pieces are being sold in China as in the United States, United Kingdom and France together," said Artprice in its annual report.

This interesting AFP article, filed from Paris, appeared on the news.yahoo.com Internet site early yesterday afternoon EDT---and it's courtesy of reader M.A.

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Renowned Market Historian: BABA Marks The Top

Wouldn’t it be ironic if this great bull market ended last Friday, on the occasion of Alibaba’s record-setting IPO, the largest in history?

More than a few of the investment advisers I monitor are entertaining that possibility, especially in light of Monday’s triple-digit loss in the Dow and the NASDAQ's decline of more than 1%. Alibaba dropped over 4% on its second day of trading.

Those advisers point out that history’s most significant market tops have often been accompanied by high-profile events that prompt the average investor to overcome any residue of skepticism they may be harboring.

Nevertheless, there have been a number of disturbing developments in recent months that distinguish today’s market from those that prevailed at other points in this bull market. And, according to at least one market historian, these developments suggest that a market top of no small significance is imminent.

This commentary by Mark Hulbert appeared on the David Stockman website yesterday sometime---and it's the second offering of the day from Roy Stephens.

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Time to worry? Russell 2000 hits 'death cross'

The Russell 2000 has been diverging from the broader market over the last several weeks, and now technicians point out it has flashed a bearish signal. For the first time in more than two years, the small-cap index has hit a so-called death cross.

A death cross occurs when a nearer-term 50-day moving average falls below a longer-term, 200-day moving average. Technicians argue that a death cross can be a bearish sign.

While traders have already been quite bearish on the Russell 2000 so far this quarter, no other major U.S. index is near its death cross.

More evidence of the recent weakness in small-cap stocks: the Russell 2000 is currently about 7 percent below its all-time high set at the start of the quarter on July 1, while both the Dow and S&P 500 are just off their own record levels hit last week.

This CNBC story showed up on their website at 1:23 p.m. EDT on Monday afternoon and it's the first of two articles I found in yesterday's edition of the King Report.

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Rockefellers to sell oil assets as part of $50B global warming fight

The Rockefellers, who made their vast fortune on oil, will on Monday join and other philanthropies and high-wealth individuals in a pledge to sell and get out of a total of $50 billion US worth of fossil fuel assets.

The Global Divest-Invest coalition will announce Monday that the Rockefeller family and others have joined the global movement to divest fossil fuel investments, a day before 120 heads of state address the United Nations to discuss what efforts their countries are making to address a marked long-term increase in greenhouse gas emissions.

Since the movement began in 2011, some 650 individuals and 180 institutions which together own $50 billion in assets have pledged to divest from fossil fuels over five years using a variety of approaches.

I don't know why this is such a big story, as someone else will be happy to buy these assets---and the pollution these companies produce will still be there.  But if you're a desperate environmentalist, any port in a storm, I suppose.  This article was posted on the very left-leaning cbc.ca Internet site on Monday---and it's courtesy of reader Brad Robertson.

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In two charts: Mario Draghi's plan to save the eurozone isn't working

After a new monetary stimulus package failed to drum up appetite from the euro area's biggest banks, two gauges of confidence in the eurozone recovery have fallen.

Banks shunned the European Central Bank's (ECB) most recent measure, which attracted just attracted just €82.6bn (£65.2bn) of interest from banks this September.

Designed to revive inflation in the eurozone, the demand was much lower than the €150bn (£120bn) expected by analysts.

The poor performance has been reflected in measures of confidence, as analysts worry that the eurozone could drift closer towards outright deflation.

This article showed up on the telegraph.co.uk Internet site at 3:57 p.m. BST in London on Monday---and it's the second commentary of the day from yesterday's edition of the King Report.

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Merkel Hopes to Settle Gas Dispute Between Russia and Ukraine

With a major trade meeting between Russia and Ukraine approaching, German Chancellor Angela Merkel has advocated Tuesday for a long-term solution to the gas dispute between the two countries on Tuesday, AP reports.

Merkel said said that although there have been some “small successes” to calm the Ukraine crisis, a long-term working solution has yet to be found. The dispute over payments for past deliveries and future gas prices is one of the major issues which must be resolved “as quickly as possible”, Merkel told on Tuesday.

The German Chancellor’s statement comes concurrently with E.U. Energy Commissioner Guenther Oettinger who warned Russia not to use gas as a weapon against Ukraine, AFP said.

This brief article appeared on the RIA Novosti Internet site at 7:30 p.m. Moscow time on their Tuesday evening, which was 1:30 p.m. in New York.  I thank South African reader B.V. for sharing it with us.

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Putin leaves Germany’s factories in a worse state than anyone imagined

Key gauges of Germany manufacturing slumped in September, falling to a 15-month low as ongoing tensions over Ukraine weighed on the sector.

Markit’s purchasing managers’ index (PMI) for the sector dropped to 50.3, from 51.4 a month earlier. The reading is barely above 50, implying that the sector is expanding, but slowly.

No analyst polled by Reuters expected a number this bad.

The most pessimistic expert forecast that the PMI figure would fall to 51, while the average analyst believed Germany’s PMI would drop to 51.2.

Germany’s factories are particularly exposed to any conflict between Russia and its neighbours, as well as the tit-for-tat sanctions exchanged between Russia and the E.U.

This article, which is certainly worth reading, appeared on the The Telegraph's website at 9:24 a.m. BST on their Tuesday morning---and I thank Roy Stephens for sending it our way.

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Furious Obama Says Calls to Putin Going Straight to Voice Mail

In what he called “a provocative and defiant act,” President Obama charged on Tuesday that Russian President Vladimir Putin has started letting his calls go directly to voice mail.

Speaking at the White House before this week’s NATO summit, a visibly furious Obama said that Putin’s new practice of letting his calls go straight to voice mail “hampers our ability to discuss the future of Ukraine and other important issues going forward.”

Having left dozens of voice mails for the Russian President, Obama said that he tried to reach him via e-mail on Monday night but received an out-of-office auto reply.

This very tongue-in-cheek piece -- wink))) -- from The Borowitz Report, showed up on The New Yorker website in very early September---and it's another offering from reader B.V.

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Golan Heights: Israel military shoots down Syrian fighter jet

The Israeli military shot down a Syrian fighter jet that infiltrated its airspace over the Golan Heights on Tuesday morning — the first such downing in decades, heightening tensions in the volatile plateau.

The military said a "Syrian aircraft infiltrated into Israeli air space" in the morning hours and that the military "intercepted the aircraft in mid-flight, using the Patriot air defence system."

The military would not say what type of aircraft was downed and said the circumstances of the incident were "unclear."

A defence official identified the downed aircraft as a Sukhoi Su-24 Russian fighter plane. Previously, it was reported to have been a MiG aircraft. He said the Syrian jet penetrated 800 metres into Israeli air space and tried to return to Syria after the Patriot missile was fired.

This AP news item appeared on the news.ca.msn.com Internet site at 5:14 a.m. BST on Tuesday morning local time---and I thank Brad Robertson for his second story of the day.

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Syrian General: ‘Moderate Opposition’ in Syria Figment of Obama’s Imagination

The "moderate opposition" that U.S. President Barack Obama said Washington would train and equip to address the Islamic State (IS) militant threat in Iraq and Syria does not exist, Maj. Gen. Yahya Suleiman told Rossiya Segodnya International Information Agency on Tuesday.

"We are accustomed to the fact that the United States is often hypocritical. The biggest hypocrisy was displayed by the American side, when the U.S. president announced that there is a "moderate opposition" in Syria. However, this was nothing more than a figment of his [Barack Obama's] own imagination," Maj. Gen. Suleiman said.

"At the same time, such a statement had special meaning and was made in order to satisfy the U.S. allies that got involved in a conspiracy against Syria - especially the Gulf states led by Saudi Arabia. That is why the United States, feeding them with promises, agreed that they prepare 5,000 fighters," Maj. Gen. Suleiman added.

This article appeared on the RIA Novosti website at 8:29 p.m. Moscow time on their Tuesday evening, which was 12:29 p.m. EDT.  It's the third offering of the day from reader B.V.

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Weeks of U.S. Strikes Fail to Dislodge ISIS in Iraq

After six weeks of American airstrikes, the Iraqi government’s forces have scarcely budged the Sunni extremists of the Islamic State from their hold on more than a quarter of the country, in part because many critical Sunni tribes remain on the sidelines.

Although the airstrikes appear to have stopped the extremists’ march toward Baghdad, the Islamic State is still dealing humiliating blows to the Iraqi Army. On Monday, the government acknowledged that it had lost control of the small town of Sichar and lost contact with several hundred of its soldiers who had been besieged for nearly a week at a camp north of the Islamic State stronghold of Falluja, in Anbar Province.

By midday, there were reports that hundreds of soldiers had been killed there in battle or mass executions. Ali Bedairi, a lawmaker from the governing alliance, said more than 300 soldiers had died after the loss of the base, Camp Saqlawiya. The prime minister ordered the arrest of the responsible officers, although a military spokesman put the death toll at just 40 and said 68 were missing.

This essay appeared on The New York Times website on Monday sometime---and in their print edition yesterday.  It's another contribution from Roy Stephens.

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U.S. to Take Action Against Islamic State Disregarding ‘Geography or Borders’: Reports

"We will not allow geography or borders to prevent us from taking action [against the IS]," Kerry said at a press conference following his meeting with Iraqi President Fuad Masum, as quoted by Associated Press (AP).

"We will hold them [IS militants] responsible for their grotesque atrocities," Kerry stressed, adding that "we will not allow them to find safe haven where they think they can have sanctuary against accountability."

Earlier on Tuesday, U.S. President Barack Obama pledged to continue the fight against IS militants and to build up the anti-IS international coalition, which now comprises over 40 countries.

The Unites States carried out a number of airstrikes against IS positions in Syria on Tuesday, using aircraft, drones and Tomahawk missiles. Saudi Arabia, Jordan, Bahrain, Qatar and the United Arab Emirates also reportedly took part in the attacks.

This news story showed up on the RIA Novosti website at 12:45 a.m. Moscow time on their Wednesday morning---and once again I thank Roy Stephens for sending it.

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Russia warns U.S.-led coalition: Those who carry out strikes in Syria face blowback

The Russian Foreign Ministry has said that those countries initiating one-sided military scenarios take international legal responsibility for their consequences. It comes as the U.S.-led coalition begins its anti-ISIS strikes in Syria.

"Attempts to achieve one's own geopolitical goals in violation of the sovereignty of countries in the region only exacerbate tensions and further destabilize the situation," the statement said.

The launch of the U.S.-led operation against the jihadist movement Islamic State (formerly known as ISIS or ISIL) has seen strikes targeting training camps, headquarters and weapons supplies in northern and eastern Syria. However, eight civilians have been killed in the strikes since the start of the attack, three of them children. At least 30 militants have also been declared dead.

Syria, in its turn, said in a statement that it’s prepared to cooperate with any international anti-terrorism effort. The country won’t stop the fight with IS extremists, the Syrian Foreign Ministry said.

This news item was posted on the RIA Novosti website at 2:21 p.m. Moscow time on their Tuesday afternoon---and it's courtesy of Roy Stephens as well.

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'China won’t support sanctions against Moscow'

China will never support any sanctions against Russia and will never join them, Valentina Matviyenko, speaker of the Russian parliament’s upper house said, citing Chinese President Xi Jinping, with whom she met on Tuesday.

Both Russia and China believe the sanctions are illegal, ineffective and counterproductive, according to Matviyenko. They are nothing but an attempt “to exert pressure on sovereign states to change their position and to weaken them and suppress their development,” she stressed.

Matviyenko thanked Beijing for its public position towards Western sanctions imposed on Russia over the Ukrainian conflict. China has offered an “absolutely objective” assessment of what is now going on in Ukraine. Moreover, no sanctions will affect the long-term strategic partnership between Moscow and Beijing, which reflects the interests of both peoples, she noted.

This Russia Today story was posted on their website at 12:41 p.m. yesterday afternoon Moscow time---and it's the final offering of the day from Roy Stephens, for which I thank him.

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Three King World News Blogs

1. William Kaye [#1]: "Sovereign Buy Orders in Gold, But Watch Silver For Price Gains"  2. Stephen Leeb: "China, Russia, Germany, India---and a Road Map to $10,000 Gold"  3. William Kaye [#2]: "Gold, Silver, Hindenburg Omens & A Full-Blown Collapse"

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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Mark O'Byrne: Gold, Silver Bullion Coin Sales Robust Despite Sell Off

Despite the recent bout of price weakness, gold American eagle coin sales from the U.S. Mint have picked up significantly from last month.

The latest bullion coin sales figures from the U.S. Mint show a tentative pickup and robust retail bullion demand, with September sales stronger for both the  American Eagle and American Buffalo gold coins as well as for the American Eagle silver 1 oz coins.

Month-to-date for September, gold Eagle sales across all coin sizes have already reached 43,200 oz compared to total gold Eagle sales of 25,000 oz in August. This is also well ahead of September 2013, when total gold Eagle sales for the month only touched 13,000 oz.

Gold American Buffalo 1 oz sales so far this month have reached 10,500 oz, up from 8,000 oz in August, and 5,500 oz in July. With a strong first quarter, year-to-date American Buffalo sales are now running at a cumulative 135,500 oz for 2014.

Here's the commentary by Mark that I mentioned at the top of this column.  He's done an excellent job of reporting on this, so why should I re-invent the wheel by trying to put this in my words.  It was posted on the goldcore.com Internet site yesterday---and I thank him on your behalf.

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Venezuela opens gold vault to impromptu inspection -- So how about it, central banks?

Francisco Rodriguez, an economist with Bank of America Corp., was at a routine meeting with Venezuelan central bank officials last week when he sprung an unusual question on them: Can you show me your gold?

He'd been itching to take a peek for years and now was the time to ask. With the government's bonds sinking toward prices that indicate investors are bracing for the possibility of default, the country's $15 billion of gold bars are crucial to ensuring debt payments are met. His first impression once inside the vaults? Those bars don't take up a lot of room.

"You picture that amount of money requiring a lot of space when, in reality, it all fits in five small cells that were not even full to the top," Rodriguez, a Venezuela native who covers Andean economies for Bank of America Corp. in New York, said in a telephone interview yesterday. He said he started counting frantically in his head, summing up figures scrawled out on signs near each pile of the metal. By his quick math, the gold was all there.

This Bloomberg item, filed from Mexico City, showed up on their Internet site at 6:00 p.m. MDT yesterday evening---and was something I found at the gata.org Internet site.

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Gold Reserve says awarded $740.3 million in Venezuela Brisas arbitration

The International Centre for Settlement of Investment Disputes (ICSID) determined Venezuela must pay U.S.-based miner Gold Reserve $740.3 million for terminating its Las Brisas gold concession, the company said on Monday.

Socialist-run Venezuela in 2009 formally ended the concession in one of Latin America's largest gold deposits as part of a strategy to increase state control of key economic sectors.

Gold Reserve then sought $2.1 billion in damages at the World Bank's ICSID for what it deemed an expropriation.

"While the company is pleased with the award, it is less than the value of the Brisas project at today's gold and copper prices and Venezuela will substantially benefit from the development of the mine," the company said in a statement on its website.

This gold-related news item, filed from Caracas, put in an appearance on the Reuters website at 9:20 p.m. EDT on Monday evening---and I found it embedded in another GATA release from yesterday.

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China will take control of gold pricing, Sprott's Charles Oliver says

Sprott Asset Management gold portfolio manager Charles Oliver tells the Sprott Money News' Jeff Rutherford that China is well on its way to taking control of the monetary metal's price-determination mechanisms and building its gold reserves to a much higher level.

The interview is 8:54 minutes long---and was posted on the sprottmoney.com Internet site on Monday.  I thank Chris Powell for wordsmithing the above paragraph of introduction.

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Gold price suppression covered fully by GATA's Chris Powell on 'The Larry Parks Show'

Thanks to the interviewer's knowledge of the issue and willingness to spend time on it, your secretary/treasurer got to cover many aspects of the Western gold price suppression scheme last week on "The Larry Parks Show," broadcast on the Manhattan Neighborhood Network in New York. Parks was so adept because he is executive director of the Foundation for the Advancement of Monetary Education.

Among the aspects discussed were the U.S. government's having authorized itself to rig all markets secretly, the U.S. government documents recently disclosed showing that central banks are trading secretly in all major U.S. futures markets, the other documents GATA has compiled proving the gold price suppression scheme, why the gold mining industry refuses to do anything about it, why the scheme will keep succeeding until gold investors shun "paper gold," and the treason of the central bankers in developing countries.

I posted this video interview in yesterday's column as well, but never had the chance to watch it before I did.  Well, yesterday afternoon I viewed it from start to finish---and Chris is at the very top of his game here.  If you want to understand the "why" of the precious metal price management scheme [along with the price management scheme in copper and crude oil] this interview explains it in all its horrid details.

Chris uses the word "treason" to describe the action of central banks in the suppression gold/commodity prices---and that's precisely what it is.

If you didn't have the opportunity to watch this yesterday---then drop everything and watch it now.  And if you did take the time to view it, it's certainly worth a second look.  Without doubt it's the most important commentary that I've posted in this column for a very long time---and it's an absolute must watch.  As I also said yesterday, it deserves wide distribution---and now that I've actually watched it, that's what this interview deserves, so please pass it around.  Thanks.

It was posted on the gata.org Internet site at 10:39 p.m. EDT Sunday evening.

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